California Legislature—2015–16 Regular Session

Assembly BillNo. 557


Introduced by Assembly Member Irwin

February 23, 2015


An act to amend Sections 2117, 6210, and 8210 of, and to add Sections 5008.9, 6610.5, 8610.5, and 9680.5 to, the Corporations Code, and to add Sections 19548.1 and 23156 to the Revenue and Taxation Code, relating to nonprofit corporations.

LEGISLATIVE COUNSEL’S DIGEST

AB 557, as introduced, Irwin. Nonprofit corporations: abatement: dissolution: surrender.

The Nonprofit Corporation Law, among other things, generally regulates the organization and operation of nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations.

(1) Within a specified period of time after the filing of its original articles of incorporation and biennially thereafter, existing law requires nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations to file a statement, known as a Statement of Information, with the Secretary of State containing specified information including the street address of its principal office and its mailing address. Within a specified period of time after filing its original statement and designation and annually thereafter, existing law, the General Corporation Law, requires every foreign corporation, including foreign nonprofit corporations, as specified, to file a statement, known as a Statement of Information, with the Secretary of State containing specified information, including the street address of its principal executive office and its mailing address.

This bill would authorize the Secretary of State to also obtain address information from the Franchise Tax Board to use in providing notices to a foreign corporation, including these foreign nonprofit corporations. This bill would specifically authorize the Franchise Tax Board to disclose this information.

(2) Existing law authorizes the corporate powers, rights, and privileges of a domestic taxpayer to be suspended, and the exercise of the corporate powers, rights, and privileges of a foreign taxpayer in this state to be forfeited, if certain tax liabilities are not paid or a taxpayer fails to file a tax return. Existing law also authorizes the corporate powers, rights, and privileges of a domestic corporation exempt from income tax to be suspended and the exercise of the corporate powers, rights, and privileges of a foreign corporation in this state exempt from income tax to be forfeited if the organization fails to file the annual information return or a specified statement for organizations not required to file the information return or pay a specified amount due. Existing law requires notice prior to the suspension or forfeiture of a taxpayer’s corporate powers, rights, and privileges. Existing law requires the Franchise Tax Board to transmit to the Secretary of State the names of those taxpayers subject to these suspension or forfeiture provisions and thereby makes the suspension or forfeiture effective. Under existing law, the Secretary of State’s certificate is prima facie evidence of the suspension or forfeiture.

Under existing law, a corporation that fails to file a Statement of Information with the Secretary of State within a specified time period and was certified for penalty is subject to suspension rather than penalty. Existing law requires the Secretary of State to provide a notice to the nonprofit corporation informing it that its corporate powers, rights, and privileges will be suspended within a specified time period if the Statement of Information is not filed. If the nonprofit corporation does not file the Statement of Information, existing law requires the Secretary of State to notify the Franchise Tax Board and the nonprofit corporation of the suspension and upon that notification the corporate powers, rights, and privileges of the nonprofit corporation are suspended.

This bill would make a nonprofit public benefit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a foreign nonprofit corporation, subject to administrative dissolution or administrative surrender, as specified, if the nonprofit corporation’s corporate powers are, and have been, suspended or forfeited by the Franchise Tax Board for a specified period of time or if the nonprofit corporation has not filed a Statement of Information with the Secretary of State for a specified period of time. Prior to the administrative dissolution or administrative surrender of the nonprofit corporation, the bill would require either the Franchise Tax Board or the Secretary of State to provide notice to the nonprofit corporation of the pending administrative dissolution or administrative surrender. The bill would also require the Secretary of State to provide notice of the pending administrative dissolution or administrative surrender on its Internet Web site, as specified. The bill would authorize a nonprofit corporation to provide the Franchise Tax Board or the Secretary of State with a written objection to the administrative dissolution or administrative surrender. If there is no written objection or the written objection fails, the bill would require the nonprofit corporation to be administratively dissolved or administratively surrendered and would provide that the certificate of the Secretary of State is prima facie evidence of the administrative dissolution or administrative surrender. Upon administrative dissolution or administrative surrender, the bill would abate the nonprofit corporation’s liabilities for qualified taxes, interest, and penalties, as provided.

(3) Existing law, the Nonprofit Corporation Law, authorizes a nonprofit public benefit corporation, nonprofit mutual benefit corporation, and nonprofit religious corporation to elect voluntarily to wind up and dissolve by either approval of a majority of all members or approval of the board and approval of the members. Under existing law, the General Corporation Law, when a corporation has not issued shares, a majority of the directors, or, if no directors have been named in the articles or have been elected, the incorporator or a majority of the incorporators, are authorized to sign and verify a specified certificate of dissolution. Existing law requires the certificate to be filed with the Secretary of State and requires the Secretary of State to notify the Franchise Tax Board of the dissolution. Existing law provides that, upon the filing of the certificate, a corporation is dissolved and its powers, rights, and privileges cease.

This bill would enact provisions similar to those General Corporation Law provisions and make them applicable to nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations. The bill would additionally provide that liability to creditors, if any, is not discharged, the liability of the directors of the dissolved nonprofit corporation is not discharged, and the dissolution of a nonprofit corporation does not diminish or adversely affect the ability of the Attorney General to enforce specified liabilities.

(4) Existing law requires every corporation doing business within the limits of this state and not expressly exempted from taxation to annually pay to the state, for the privilege of exercising its corporate franchises within this state, a tax according to or measured by its net income, as specified. Under existing law, every corporation, except as specified, is subject to the minimum franchise tax until the effective date of dissolution or withdrawal or, if later, the date the corporation ceases to do business within the limits of this state. Upon certification by the Secretary of State that a nonprofit public benefit corporation or a nonprofit mutual benefit corporation has failed to file the required Statement of Information, existing law requires the Franchise Tax Board to assess a specified penalty.

This bill would require the Franchise Tax Board to abate, upon written request by a qualified nonprofit corporation, as defined, unpaid qualified taxes, interest, and penalties, as defined, for the taxable years in which the nonprofit corporation certifies, under penalty of perjury, that it was not doing business, as defined. The bill would make this abatement conditioned on the dissolution of the qualified corporation within a specified period of time of filing the request for abatement. The bill would require the Franchise Tax Board to prescribe rules and regulations to carry out these abatement provisions and would exempt these rules and regulations from the Administrative Procedure Act.

(5) Existing state constitutional law prohibits the Legislature from making any gift, or authorizing the making of any gift, of any public money or thing of value to any individual, municipal, or other corporation.

This bill would make certain legislative findings and declarations that abatement of a nonprofit corporation’s liabilities for specified taxes, penalties, and interest serves a statewide public purpose, as provided.

(6) By expanding the crime of perjury, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P5    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

3(a) There are more than 150,000 nonprofit corporations in
4California that provide a variety of programs and services in areas
5as diverse as education, recreation, health care, legal, job training,
6and housing to millions of Californians. These organizations,
7depending on their formation status, are required to register with
8the office of the Secretary of State, the Franchise Tax Board, and
9the office of the Attorney General.

10(b) Every year, hundreds of nonprofit corporations seek
11administrative changes to expand their mission or alter their tax
12status, and, in some cases, to even go out of existence. This
13dissolution process, which involves the winding down of the
14nonprofit corporation’s affairs, is very cumbersome and protracted.

15(c) In order to more effectively analyze and monitor the status,
16finances, and activities of a nonprofit corporation, it is in the
17public’s interest to establish a streamlined process to efficiently
18dissolve a nonprofit corporation. The act of dissolving the nonprofit
19corporation and abating unpaid taxes, interest, and penalties serves
20a statewide public purpose by ensuring that nonprofit corporations
21that have been suspended or forfeited tax exempt status are no
22longer able to do business in the state, which will relieve the
23citizens of California from unknowingly donating to a nonprofit
24corporation that is not complying with the laws of the state, and
25does not constitute a gift of public funds within the meaning of
26Section 6 of Article XVI of the California Constitution.

27

SEC. 2.  

Section 2117 of the Corporations Code is amended to
28read:

29

2117.  

(a) Every foreign corporation (other than a foreign
30association) qualified to transact intrastate business shall file,
31within 90 days after the filing of its original statement and
32designation of foreign corporation and annually thereafter during
33the applicable filing period, on a form prescribed by the Secretary
34of State, a statement containing the following:

35(1) The name of the corporation as registered in California and
36the California Secretary of State’s file number.

37(2) The names and complete business or residence addresses of
38its chief executive officer, secretary, and chief financial officer.

P6    1(3) The street address of its principal executive office.

2(4) The mailing address of the corporation, if different from the
3street address of its principal executive office.

4(5) The street address of its principal business office in this
5state, if any.

6(6) If the corporation chooses to receive renewal notices and
7any other notifications from the Secretary of State bybegin delete electronic
8mailend delete
begin insert emailend insert instead of by United States mail, the corporation shall
9include a validbegin delete electronic mailend deletebegin insert emailend insert address for the corporation
10or for the corporation’s designee to receive those notices.

11(7) A statement of the general type of business that constitutes
12the principal business activity of the corporation (for example,
13manufacturer of aircraft; wholesale liquor distributor; or retail
14department store).

15(b) The statement required by subdivision (a) shall also
16designate, as the agent of the corporation for the purpose of service
17of process, a natural person residing in this state or a corporation
18that has complied with Section 1505 and whose capacity to act as
19the agent has not terminated. If a natural person is designated, the
20statement shall set forth the person’s complete business or
21residence street address. If a corporate agent is designated, no
22address for it shall be set forth.

23(c) The statement required by subdivision (a) shall be available
24and open to the public for inspection. The Secretary of State shall
25provide access to all information contained in the statement by
26means of an online database.

27(d) In addition to any other fees required, a foreign corporation
28shall pay a five-dollar ($5) disclosure fee upon filing the statement
29required by subdivision (a). One-half of the fee shall,
30notwithstanding Section 12176 of the Government Code, be
31deposited into the Business Programs Modernization Fund
32established in subdivision (k) of Section 1502, and one-half shall
33be deposited into the Victims of Corporate Fraud Compensation
34Fund established in Section 2280.

35(e) Whenever any of the information required by subdivision
36(a) is changed, the corporation may file a current statement
37containing all the information required by subdivisions (a) and
38(b). In order to change its agent for service of process or the address
39of the agent, the corporation shall file a current statement
40containing all the information required by subdivisions (a) and
P7    1(b). Whenever any statement is filed pursuant to this section, it
2supersedes any previously filed statement and the statement in the
3filing pursuant to Section 2105.

4(f) Subdivisions (c), (d), (f), and (g) of Section 1502 apply to
5statements filed pursuant to this section, except that “articles” shall
6mean the filing pursuant to Section 2105, and “corporation” shall
7mean a foreign corporation.

begin insert

8(g) The Secretary of State may obtain address information from
9the Franchise Tax Board to use to provide notice to a foreign
10nonprofit corporation, pursuant to Section 19548.1 of the Revenue
11and Taxation Code.

end insert
12

SEC. 3.  

Section 5008.9 is added to the Corporations Code, to
13read:

14

5008.9.  

(a) A nonprofit corporation described in Section 5059,
155060, or 5061, or a foreign nonprofit corporation, as described in
16Chapter 21 (commencing with Section 2100) of Division 1, that
17has qualified to transact intrastate business, shall be subject to
18administrative dissolution or administrative surrender in accordance
19with this section if, as of January 1, 2016, or later, at least one of
20the following applies:

21(1) The nonprofit corporation’s corporate powers are, and have
22been, suspended or forfeited by the Franchise Tax Board for a
23period of not less than 48 continuous months.

24(2) The nonprofit corporation has not filed a Statement of
25 Information with the Secretary of State, as provided by Section
262117, 6210, 8210, or 9660, for a period of not less than 48
27continuous months.

28(b) Prior to the administrative dissolution or administrative
29surrender of the nonprofit corporation, the nonprofit corporation
30shall be notified of the pending administrative dissolution or
31administrative surrender as follows:

32(1) The Franchise Tax Board shall mail written notice to the
33last known address of a nonprofit corporation meeting the
34requirement described in paragraph (1) of subdivision (a).

35(2) The Secretary of State shall provide a notice to the last
36known address of a nonprofit corporation meeting the requirement
37described in paragraph (2) of subdivision (a).

38(3) If the nonprofit corporation does not have a valid address
39in the records of the Franchise Tax Board or the Secretary of State,
40the notice provided in subdivision (d) shall be deemed sufficient
P8    1notice prior to administrative dissolution or administrative
2surrender.

3(c) The Franchise Tax Board shall transmit to the Secretary of
4State the names of nonprofit corporations subject to the
5administrative dissolution or administrative surrender provisions
6of this section.

7(d) The Secretary of State shall provide 60 calendar days’ notice
8of the pending administrative dissolution or administrative
9surrender on its Internet Web site by listing the corporation name,
10the Secretary of State’s file number, and California corporation
11number, as applicable, for the nonprofit corporation.

12(e) (1) A nonprofit corporation may provide the Franchise Tax
13Board or the Secretary of State with a written objection to the
14administrative dissolution or administrative surrender.

15(2) The Franchise Tax Board and the Secretary of State shall
16notify each other if a written objection has been received.

17(f) If no written objection to the administrative dissolution or
18administrative surrender is received by the Secretary of State or
19the Franchise Tax Board during the 60-day period described in
20subdivision (d), the nonprofit corporation shall be administratively
21dissolved or administratively surrendered in accordance with this
22section. The certificate of the Secretary of State shall be prima
23facie evidence of the administrative dissolution or administrative
24surrender.

25(g) (1) If the written objection of a nonprofit corporation to the
26administrative dissolution or administrative surrender has been
27received by the Franchise Tax Board or the Secretary of State
28before the expiration of the 60-day period described in subdivision
29(d), that nonprofit corporation shall have an additional 90 days
30from the date the written objection is received by the Franchise
31Tax Board or the Secretary of State to pay or otherwise satisfy all
32accrued taxes, penalties, and interest and to file a current Statement
33of Information with the Secretary of State.

34(2) (A) If the conditions in paragraph (1) are satisfied, the
35administrative dissolution or administrative surrender shall be
36canceled.

37(B) If the conditions in paragraph (1) are not satisfied, the
38nonprofit corporation shall be administratively dissolved or
39administratively surrendered in accordance with this section as of
40the date that is 90 days after the receipt of the written objection.

P9    1(3) The Franchise Tax Board or the Secretary of State may
2extend the 90-day period in paragraph (1), but for no more than
3one period of 90 days.

4(h) Upon administrative dissolution or administrative surrender
5in accordance with this section, the nonprofit corporation’s
6liabilities for qualified taxes, interest, and penalties as defined in
7Section 23156 of the Revenue and Taxation Code, if any, shall be
8abated. Any actions taken by the Franchise Tax Board to collect
9that abated liability shall be released, withdrawn, or otherwise
10terminated by the Franchise Tax Board, and no subsequent
11administrative or civil action shall be taken or brought to collect
12all or part of that amount. Any amounts erroneously received by
13the Franchise Tax Board in contravention of this section may be
14credited and refunded in accordance with Article 1 (commencing
15with Section 19301) of Chapter 6 of Part 10.2 of Division 2 of the
16Revenue and Taxation Code.

17(i) If the nonprofit corporation is administratively dissolved or
18administratively surrendered under this section, the liability to
19creditors, if any, is not discharged. The liability of the directors
20of, or other persons related to, the administratively dissolved or
21administratively surrendered nonprofit corporation is not
22discharged. The administrative dissolution or administrative
23surrender of a nonprofit corporation pursuant to this section shall
24not diminish or adversely affect the ability of the Attorney General
25to enforce liabilities as otherwise provided by law.

26

SEC. 4.  

Section 6210 of the Corporations Code is amended to
27read:

28

6210.  

(a) Every corporation shall, within 90 days after the
29filing of its original articles and biennially thereafter during the
30applicable filing period, file, on a form prescribed by the Secretary
31of State, a statement containing: (1) the name of the corporation
32and the Secretary of State’s file number; (2) the names and
33complete business or residence addresses of its chief executive
34officer, secretary, and chief financial officer; (3) the street address
35of its principal office in this state, if any; (4) the mailing address
36of the corporation, if different from the street address of its
37principal executive office or if the corporation has no principal
38office address in this state; and (5) if the corporation chooses to
39receive renewal notices and any other notifications from the
40Secretary of State bybegin delete electronic mailend deletebegin insert emailend insert instead of by United
P10   1States mail, a validbegin delete electronic mailend deletebegin insert emailend insert address for the
2corporation or for the corporation’s designee to receive those
3notices.

4(b) The statement required by subdivision (a) shall also
5designate, as the agent of the corporation for the purpose of service
6of process, a natural person residing in this state or any domestic
7or foreign or foreign business corporation that has complied with
8Section 1505 and whose capacity to act as an agent has not
9terminated. If a natural person is designated, the statement shall
10set forth the person’s complete business or residence street address.
11If a corporate agent is designated, no address for it shall be set
12forth.

13(c) For the purposes of this section, the applicable filing period
14for a corporation shall be the calendar month during which its
15original articles were filed and the immediately preceding five
16calendar months. The Secretary of State shall provide a notice to
17each corporation to comply with this section approximately three
18months prior to the close of the applicable filing period. The notice
19shall state the due date for compliance and shall be sent to the last
20address of the corporation according to the records of the Secretary
21of State or to the lastbegin delete electronic mailend deletebegin insert emailend insert address according to
22the records of the Secretary of State if the corporation has elected
23to receive notices from the Secretary of State bybegin delete electronic mail.end delete
24begin insert email.end insert Neither the failure of the Secretary of State to send the
25notice nor the failure of the corporation to receive it is an excuse
26for failure to comply with this section.

27(d) Whenever any of the information required by subdivision
28(a) is changed, the corporation may file a current statement
29containing all the information required by subdivisions (a) and
30(b). In order to change its agent for service of process or the address
31of the agent, the corporation must file a current statement
32containing all the information required by subdivisions (a) and
33(b). Whenever any statement is filed pursuant to this section, it
34supersedes any previously filed statement and the statement in the
35articles as to the agent for service of process and the address of
36the agent.

begin insert

37(e) The Secretary of State may obtain address information from
38the Franchise Tax Board to use to provide notice to a corporation,
39pursuant to Section 19548.1 of the Revenue and Taxation Code.

end insert
begin delete

40(e)

end delete

P11   1begin insert(f)end insert The Secretary of State may destroy or otherwise dispose of
2any statement filed pursuant to this section after it has been
3superseded by the filing of a new statement.

begin delete

4(f)

end delete

5begin insert(g)end insert This section shall not be construed to place any person
6dealing with the corporation on notice of, or under any duty to
7inquire about, the existence or content of a statement filed pursuant
8to this section.

9

SEC. 5.  

Section 6610.5 is added to the Corporations Code, to
10read:

11

6610.5.  

(a) Notwithstanding any other provision of this
12division, when a corporation has not issued any memberships, a
13majority of the directors, or, if no directors have been named in
14the articles or have been elected, the incorporator or a majority of
15the incorporators, may sign and verify a certificate of dissolution
16stating all of the following:

17(1) That the certificate of dissolution is being filed within 24
18months from the date the articles of incorporation were filed.

19(2) That the corporation does not have any debts or other
20liabilities, except as provided in paragraph (3) and subdivision (d).

21(3) That the tax liability will be satisfied on a taxes-paid basis
22or that a person or corporation or other business entity assumes
23the tax liability, if any, of the dissolving corporation and is
24responsible for additional corporate taxes, if any, that are assessed
25and that become due after the date of the assumption of the tax
26liability.

27(4) That a final franchise tax return, as described by Section
2823332 of the Revenue and Taxation Code, has been or will be filed
29with the Franchise Tax Board as required under Part 10.2
30(commencing with Section 18401) of Division 2 of the Revenue
31and Taxation Code.

32(5) That the corporation was created in error.

33(6) That the known assets of the corporation remaining after
34payment of, or adequately providing for, known debts and liabilities
35have been distributed as required by law or that the corporation
36acquired no known assets, as the case may be.

37(7) That a majority of the directors, or, if no directors have been
38named in the articles or have been elected, the incorporator or a
39majority of the incorporators authorized the dissolution and elected
40to dissolve the corporation.

P12   1(8) That the corporation has not issued any memberships, and
2if the corporation has received payments for memberships, those
3payments have been returned to those making the payments.

4(9) That the corporation is dissolved.

5(b) A certificate of dissolution signed and verified pursuant to
6subdivision (a) shall be filed with the Secretary of State. The
7Secretary of State shall notify the Franchise Tax Board of the
8dissolution.

9(c) Upon filing a certificate of dissolution pursuant to
10subdivision (b), a corporation shall be dissolved and its powers,
11rights, and privileges shall cease.

12(d) Notwithstanding the dissolution of a corporation pursuant
13to this section, its liability to creditors, if any, is not discharged.
14The liability of the directors of, or other persons related to, the
15dissolved corporation is not discharged. The dissolution of a
16corporation pursuant to this section shall not diminish or adversely
17affect the ability of the Attorney General to enforce liabilities as
18otherwise provided by law.

19

SEC. 6.  

Section 8210 of the Corporations Code is amended to
20read:

21

8210.  

(a) Every corporation shall, within 90 days after the
22filing of its original articles and biennially thereafter during the
23applicable filing period, file, on a form prescribed by the Secretary
24of State, a statement containing: (1) the name of the corporation
25and the Secretary of State’s file number; (2) the names and
26complete business or residence addresses of its chief executive
27officer, secretary, and chief financial officer; (3) the street address
28of its principal office in this state, if any; (4) the mailing address
29of the corporation, if different from the street address of its
30principal executive office or if the corporation has no principal
31office address in this state; and (5) if the corporation chooses to
32receive renewal notices and any other notifications from the
33Secretary of State bybegin delete electronic mailend deletebegin insert emailend insert instead of by United
34States mail, a validbegin delete electronic mailend deletebegin insert emailend insert address for the
35corporation or for the corporation’s designee to receive those
36notices.

37(b) The statement required by subdivision (a) shall also
38designate, as the agent of the corporation for the purpose of service
39of process, a natural person residing in this state or any domestic
40or foreign or foreign business corporation that has complied with
P13   1Section 1505 and whose capacity to act as an agent has not
2terminated. If a natural person is designated, the statement shall
3set forth the person’s complete business or residence street address.
4If a corporate agent is designated, no address for it shall be set
5forth.

6(c) For the purposes of this section, the applicable filing period
7for a corporation shall be the calendar month during which its
8original articles were filed and the immediately preceding five
9calendar months. The Secretary of State shall provide a notice to
10each corporation to comply with this section approximately three
11months prior to the close of the applicable filing period. The notice
12shall state the due date for compliance and shall be sent to the last
13address of the corporation according to the records of the Secretary
14of State or to the lastbegin delete electronic mailend deletebegin insert emailend insert address according to
15the records of the Secretary of State if the corporation has elected
16to receive notices from the Secretary of State bybegin delete electronic mail.end delete
17begin insert email.end insert Neither the failure of the Secretary of State to send the
18notice nor the failure of the corporation to receive it is an excuse
19for failure to comply with this section.

20(d) Whenever any of the information required by subdivision
21(a) is changed, the corporation may file a current statement
22containing all the information required by subdivisions (a) and
23(b). In order to change its agent for service of process or the address
24of the agent, the corporation must file a current statement
25containing all the information required by subdivisions (a) and
26(b). Whenever any statement is filed pursuant to this section, it
27supersedes any previously filed statement and the statement in the
28articles as to the agent for service of process and the address of
29the agent.

begin insert

30(e) The Secretary of State may obtain address information from
31the Franchise Tax Board to use to provide notice to a corporation,
32pursuant to Section 19548.1 of the Revenue and Taxation Code.

end insert
begin delete

33(e)

end delete

34begin insert(f)end insert The Secretary of State may destroy or otherwise dispose of
35any statement filed pursuant to this section after it has been
36superseded by the filing of a new statement.

begin delete

37(f)

end delete

38begin insert(g)end insert This section shall not be construed to place any person
39dealing with the corporation on notice of, or under any duty to
P14   1inquire about, the existence or content of a statement filed pursuant
2to this section.

3

SEC. 7.  

Section 8610.5 is added to the Corporations Code, to
4read:

5

8610.5.  

(a) Notwithstanding any other provision of this
6division, when a corporation has not issued any memberships, a
7majority of the directors, or, if no directors have been named in
8the articles or have been elected, the incorporator or a majority of
9the incorporators, may sign and verify a certificate of dissolution
10stating the following:

11(1) That the certificate of dissolution is being filed within 24
12months from the date the articles of incorporation were filed.

13(2) That the corporation does not have any debts or other
14liabilities, except as provided in paragraph (3) and subdivision (d).

15(3) That the tax liability will be satisfied on a taxes-paid basis,
16or that a person or corporation or other business entity assumes
17the tax liability, if any, of the dissolving corporation and is
18responsible for additional corporate taxes, if any, that are assessed
19and that become due after the date of the assumption of the tax
20liability.

21(4) That a final franchise tax return, as described by Section
2223332 of the Revenue and Taxation Code, has been or will be filed
23with the Franchise Tax Board as required under Part 10.2
24(commencing with Section 18401) of Division 2 of the Revenue
25and Taxation Code.

26(5) That the corporation was created in error.

27(6) That the known assets of the corporation remaining after
28payment of, or adequately providing for, known debts and liabilities
29have been distributed as required by law or that the corporation
30acquired no known assets, as the case may be.

31(7) That a majority of the directors, or, if no directors have been
32named in the articles or have been elected, the incorporator or a
33majority of the incorporators authorized the dissolution and elected
34to dissolve the corporation.

35(8) That the corporation has not issued any memberships, and
36if the corporation has received payments for memberships, those
37payments have been returned to those making the payments.

38(9) That the corporation is dissolved.

39(b) A certificate of dissolution signed and verified pursuant to
40subdivision (a) shall be filed with the Secretary of State. The
P15   1Secretary of State shall notify the Franchise Tax Board of the
2dissolution.

3(c) Upon filing a certificate of dissolution pursuant to
4subdivision (b), a corporation shall be dissolved and its powers,
5rights, and privileges shall cease.

6(d) Notwithstanding the administrative dissolution of a
7corporation pursuant to this section, its liability to creditors, if any,
8is not discharged. The liability of the directors of, or other persons
9related to, the administratively dissolved corporation is not
10discharged. The dissolution of a corporation pursuant to this section
11shall not diminish or adversely affect the ability of the Attorney
12General to enforce liabilities as otherwise provided by law.

13

SEC. 8.  

Section 9680.5 is added to the Corporations Code, to
14read:

15

9680.5.  

(a) Notwithstanding any other provision of this
16division, when a corporation has not issued any memberships, a
17majority of the directors, or, if no directors have been named in
18the articles or been elected, the incorporator or a majority of the
19incorporators, may sign and verify a certificate of dissolution
20stating the following:

21(1) That the certificate of dissolution is being filed within 24
22months from the date the articles of incorporation were filed.

23(2) That the corporation does not have any debts or other
24liabilities, except as provided in paragraph (3) and subdivision (d).

25(3) That the tax liability will be satisfied on a taxes-paid basis
26or that a person or corporation or other business entity assumes
27the tax liability, if any, of the dissolving corporation and is
28responsible for additional corporate taxes, if any, that are assessed
29and that become due after the date of the assumption of the tax
30liability.

31(4) That a final franchise tax return, as described by Section
3223332 of the Revenue and Taxation Code, has been or will be filed
33with the Franchise Tax Board as required under Part 10.2
34(commencing with Section 18401) of Division 2 of the Revenue
35and Taxation Code.

36(5) That the corporation was created in error.

37(6) That the known assets of the corporation remaining after
38payment of, or adequately providing for, known debts and liabilities
39have been distributed as required by law or that the corporation
40acquired no known assets, as the case may be.

P16   1(7) That a majority of the directors, or, if no directors have been
2named in the articles or been elected, the incorporator or a majority
3of the incorporators authorized the dissolution and elected to
4dissolve the corporation.

5(8) That the corporation has not issued any memberships, and
6if the corporation has received payments for memberships, those
7payments have been returned to those making the payments.

8(9) That the corporation is dissolved.

9(b) A certificate of dissolution signed and verified pursuant to
10subdivision (a) shall be filed with the Secretary of State. The
11Secretary of State shall notify the Franchise Tax Board of the
12dissolution.

13(c) Upon filing a certificate of dissolution pursuant to
14subdivision (b), a corporation shall be dissolved and its powers,
15rights, and privileges shall cease.

16(d) Notwithstanding the dissolution of a nonprofit corporation
17pursuant to this section, its liability to creditors, if any, is not
18discharged. The liability of the directors of, or other persons related
19to, the dissolved corporation is not discharged. The dissolution of
20a nonprofit corporation pursuant to this section shall not diminish
21or adversely affect the ability of the Attorney General to enforce
22liabilities as otherwise provided by law.

23

SEC. 9.  

Section 19548.1 is added to the Revenue and Taxation
24Code
, to read:

25

19548.1.  

(a) The Franchise Tax Board, upon request by the
26Secretary of State, pursuant to subdivision (g) of Section 2117,
27and subdivision (e) of Sections 6210 and 8210, may disclose
28information about addresses and email addresses to the Secretary
29of State to use to provide notice to a nonprofit public benefit
30corporation, nonprofit mutual benefit corporation, nonprofit
31religious corporation, or foreign nonprofit corporation.

32(b) Information disclosed to the Secretary of State pursuant to
33subdivision (a) shall be disseminated by the Secretary of State only
34as provided for by, and only for the purposes specified in, Division
352 (commencing with Section 5000) of Title 1 of the Corporations
36Code and Chapter 21 (commencing with Section 2100) of Division
371 of Title 1 of the Corporations Code.

38

SEC. 10.  

Section 23156 is added to the Revenue and Taxation
39Code
, to read:

P17   1

23156.  

(a) The Franchise Tax Board shall abate, upon written
2request by a qualified nonprofit corporation, unpaid qualified taxes,
3interest, and penalties for the taxable years in which the qualified
4nonprofit corporation certifies, under penalty of perjury, that it
5was not doing business, within the meaning of subdivision (a) of
6Section 23101.

7(b) For purposes of this section:

8(1) “Qualified nonprofit corporation” means a nonprofit
9corporation identified in Section 5059, 5060, or 5061 of the
10Corporations Code or a foreign nonprofit corporation, as described
11in Chapter 21 (commencing with Section 2100) of Division 1 of
12the Corporations Code that has qualified to transact intrastate
13business in this state and that satisfies any of the following
14conditions:

15(A) Was operating and previously obtained tax-exempt status
16with the Franchise Tax Board, but had its tax-exempt status
17revoked under Section 23777.

18(B) Was operating and previously obtained tax-exempt status
19with the Internal Revenue Service, but had its tax-exempt status
20revoked under Section 6033(j) of the Internal Revenue Code.

21(C) Was never doing business, within the meaning of subdivision
22(a) of Section 23101, in this state at any time after the time of its
23incorporation in this state.

24(2) “Qualified taxes, interest, and penalties” means tax imposed
25under Section 23153 and associated interest and penalties, and any
26penalties imposed under Section 19141. “Qualified taxes, interest,
27and penalties” does not include tax imposed under Section 23731,
28or associated interest or penalties.

29(c) The qualified corporation must establish that it has ceased
30all business operations at the time of filing the request for
31abatement under this section.

32(d) (1) The abatement of unpaid qualified tax, interest, and
33penalties is conditioned on the dissolution of the qualified
34corporation within 12 months from the date of filing the request
35for abatement under this section.

36(2) If the qualified corporation is not dissolved within 12 months
37from the date of filing the request for abatement or restarts business
38operations at any time after requesting abatement under this section,
39the abatement of qualified tax, interest, and penalties under this
40 section shall be canceled and the qualified taxes, interest, and
P18   1penalties subject to that abatement shall be treated as if the
2abatement never occurred.

3(e) The Franchise Tax Board shall prescribe any rules and
4regulations that may be necessary or appropriate to implement this
5section. Chapter 3.5 (commencing with Section 11340) of Part 1
6of Division 3 of Title 2 of the Government Code shall not apply
7to any standard, criterion, procedure, determination, rule, notice,
8or guideline established or issued by the Franchise Tax Board
9pursuant to this section.

10

SEC. 11.  

No reimbursement is required by this act pursuant
11to Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California
18Constitution.



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